Position Limits Regulation - Comment Letter - Futures Industry Association - March 25, 2011

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Position Limits for Derivatives
March 25, 2011

The FIA suggests that "spot month position limits for Referenced Contracts should not be based solely on 25 percent of 'the quantity of the commodity meeting a derivative contract’s delivery specifications.' Rather, the Commission should take into account 'the individual characteristics' of each core referenced contract, including the different settlement options — such as EFPs — available for each contract, in setting spot month position limits." FIA further states that the Commission should:

  • define bona fide hedging transactions and positions more broadly so that they encompass long-standing and important commercial risk management practices
  • re-institute a process by which hedgers can seek exemptions for non-enumerated hedging transactions
  • exercise its exemptive authority to implement a process by which liquidity providers can obtain hedge exemptions from speculative position limits.

References

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